Which of the following policies would be advocated by proponents of stabilization policy when the economy is experiencing severe unemployment?
a. a decrease in the money supply
b. an increase in tax rates
c. an increase in government purchases
d. an increase in interest rates.
c
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Overproduction results in
A) external costs. B) external benefits. C) deadweight loss. D) super-efficiency. E) the marginal benefit of the last unit produced being larger than the marginal cost.
Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that
A) people are rational. B) people respond to economic incentives. C) equity is more important than efficiency. D) optimal decisions are made at the margin.
A higher inflation rate changes the user cost of capital, which ________ the profit-maximizing level of MPK for firms, leading firms to a ________ capital-output ratio, thus ________ net investment
A) raises, higher, raising B) raises, lower, lowering C) lowers, higher, raising D) lowers, higher, lowering E) lowers, lower, raising
We measure a person's productive contribution in a market system by
A) the marginal factor cost theory of the firm. B) the profit maximization theory of the firm. C) the marginal revenue product theory of wage determination. D) the egalitarian theory of wage determination.